Interim CEO gets full time job at Office Depot

BOCA RATOn, Fla. — After serving seven months in an interim capacity, Office Deport made a surprise decision and named long-time board member Neil Austrian as its new chairman and CEO. The announcement ends a lengthy search that began last fall when former chairman and CEO Steve Odland left the company on Nov. 1, amid deteriorating business results and Austrian was tapped to serve in an interim capacity. He had previously served in an interim role prior the company’s appointment of Odland.

When the search began, it was widely expected that Office Depot would turn to an executive outside the company and perhaps outside the office products industry to turn around it sagging fortunes. That’s why the revelation that Austrian would serve as full time CEO was such a curious choice and one that offers potential insight into a future scenario that may involve the company playing a role in further consolidation of the office products industry.

“Our search for a new leader to guide Office Depot through these challenging economic times was very thorough. While we met many qualified candidates who were excited about the opportunity, we kept coming back to Neil,” said Marty Evans, the Office Depot board member who led the CEO search committee. “Over his seven months at the helm, Neil has had a profound effect on the company, its culture, and its relationships with key stakeholders. He has already increased the talent level of the management team and taken the steps necessary to grow sales, leverage assets, and build brands. His ability to focus on key initiatives, to energize associates, and to drive performance led the board to re-think the decision to introduce a new leader at this time. The board firmly believes that Neil is the best person to lead Office Depot’s return to profitable growth and to attract and build talent for the future.”

For his part, Austrian said he was flattered and humbled that the board would choose him and noted that he has witnessed the type of renewed energy and excitement at the company during the past seven months that will be necessary to restore profitability to levels experienced years earlier.

“We have focused the company on a few key initiatives, some of which will begin paying off this year, while others will reap benefits in 2012 and 2013,” Austrian said. “What has given me encouragement is the fact that our associates have all signed up for this focused approach. We understand that we are on a journey, the benefits of which will take time to fully realize.”

As the company looks to realize benefits of its focused approach, it is also conceivable it will be positioning itself for sale since the board’s selection of Austrian as CEO would not appear to be a long-term leadership solution.

“While Austrian’s main priority will be to fix the company, pursue the existing strategies, and map a path back to more normal levels of profitability, we also believe this decision has significant implications for the potential for industry consolidation in the medium-term,” said Bernstein Research analyst Colin McGranahan. “At 71 years of age, Austrian is unlikely to view himself as Office Depot CEO for a long-term horizon. As such he may be less concern about building up a lasting personal legacy, and be more agnostic and flexible in pursuing potential combinations.”

Austrian has served on the Office Depot board since 1998 when the company merged with Viking Office Products. He had been a director of Viking since 1988. Prior to his career in the office products world, Austrian was president and COO of the National Football League from April 1991 until December 1999. He was a managing director of Dillon Read & Company, Inc. from October 1987 until March 1991. Before Dillon Read, Austrian was chairman and CEO of Showtime/The Movie Channel, a joint venture between Warner Communications and Viacom, and he also served as CEO of the advertising firm Doyle, Dane, Bernbach.

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